When Prime Minister Najib Tun Razak launched the Economic Transformation Programme (ETP) on 21st September 2010, it was done with the intention of keeping Malaysia on the right track to a high-income status nation by the year 2020. In 2012, ETP boasts 72 out of 131 EPPs launched, surpassing its GNI target of RM830 billion and also surpassing its private investment target worth RM94 billion.[1] The ETP also boasts itself of the pool of acronyms; EPP, NKEA, SRI, SEDIA, IRDA, NCIA, RAPID, BOs, BLESS, and much more. And yet, your average Joe and Jane on the street not only does not fully understand the ETP, they seem to be left out from the fruits of labour of the ETP.

Failures of ETP

Prior to Najib's ETP and GTP address on RTM last night, the failures of the ETP listed include; falling surplus in which the share of external trade to GDP (gross domestic products) shrunk to 145% caused by weak external environment; the silent death of the Equal Opportunities Commission (EOC) which was supposed to be a part of the ETP; Malaysian investment abroad worth RM19.5 billion in the first half of 2012 surpassed the RM13.6 billion worth of inward investment; the GNI per capita of 49% as boasted by Najib in from USD$6,670 in 2009 to USD$9,970 in 2011 was misleading. The real figure was a minor 16.2% according to World Bank data. Recycling old failed projects such as the Karambunai Integrated Resort City and the Tanjung Agas poject. The failure to attract foreign investment to Educity, Iskandar. Of the ten institutions approached by the government, only two have been fully functioning.

Think tank Political Studies for Change (KPRU) believes Najib should also show the other set of glaring failures of the ETP which includes the falling of Malaysia's rankings in the World Economic Forum's Global Competitiveness Report (WEFs GCR; Table 2). Amongst the fall in ranking are the fall in wastefulness of government spending ranking; a fall in labour market efficiency, a fall in the government's budget balance position ; a fall in the labour market efficiency; a fall in the women in labour force, ratio to men, a fall in the technological readiness under NKEA and more.

Dazzling but Substance Lackluster ETP Speech

During the ETP and GTP speech, Najib claimed 149 EPP projects have been announced but in actual fact, according to the 2012 Annual Report, the real number is 152 EPPs planned with 408,443 employment created and it's expected GNI contribution is RM135.64 billion. Najib used ringgit Malaysia as the currency for GNI, however in an earlier 2012 report, American dollars was used instead. Why the discrepancy and non-compliance of currency? Najib also claimed an increase of 22 percent in private investment from 2011 to 2012. However, what can be seen is that still the major contributor of investment are from the government. Najib boast the 'success' of the RAPID Pengerang project and in the 2012 report state drawing the likes of Newcastle University Medicine Malaysia (NUMed), Netherlands Maritime Institute of Technology (NMIT), Raffles University Iskandar, University of Southampton Malaysia (USMC), Reading University Iskandar, Raffles American School and Marlborough College Malaysia (MCM). Yet, he seems to have left out the representatives of those institutions facing immense struggles of bureaucracy causing a mismatch of departments put in place and a lack of students with staff interested to work in Educity.[2]

Najib in his speech also quoted several international rankings such a the World Bank Ease of Doing Business Report 2013, World Competitiveness Yearbook 2012/2013, AT Kearneys FDI Confidence Index, Globe Shopper Index by the Economist Intelligence Unit, and also the International Living Magazine to display Malaysia's positive international outlook. Yet, KPRU sees that while Najib likes to bask in the so-called glory of the ETP, Najib have failed to state the rankings stated by the World Economic Forum's GCR Report, in which Malaysia pretty much fell in the expectations of accountable and transparency or that 50% of business lost business in Malaysia over corruption as stated in Transparency International. Malaysia be a leader in global shopping but Malaysia also suffers a heritage loss such as the crumble of iconic places in Jalan Sultan, Tun Perak, Lebuh Pasar and even the infamous yet iconic Pudu Jail and the non-discriminatory loss of our million years old forests particularly in East Malaysia.

Epilogue

Najib may have claimed much successes over the implementation of the ETP but what remains is the amount of gold felt by the common people of Malaysia. He may have boasted on the 'surge' felt in the Kuala Lumpur Bursa and the sukuk investment revealing in dazzling numbers, percentage and tables but KPRU sees that none of all that matters when those who feel the returns are the corporate and political figures rather than the common people of Malaysia. In a nutshell, Najib's ETP is a series of projects benefiting UMNO rent seekers rather than the ordinary Rakyat that he used to claim in hisJanji Ditepati rhetoric.

Table 1: List of ETP Activities and its Failures

No.

Failure

ETP 2012 Report

1.

Falling surplus – the share of external trade to GDP has shrunk to 145% caused by weak external environment.[3]

As of 31st December 2012, 149 EPP projects were launched worth RM211.34 billion.

2.

Oil palm replanting programme – the target plant areas was 126,500ha but only 103,000ha was achieved.[4]

113,000 hectre of oil palm planted

3.

Growth of real GNI is only 4.7%, much lower than 6% target in ETP. Its claim of RM797 billion "target" for 2011 GNI was lower than the MoF forecast of RM811 billion. This "target" was only publicised after the GNI data was released by the MoF. Furthermore, it is very low, calling for just 7.8 per cent growth, well below the average 8.8 per cent targeted in the ETP Roadmap Report. The ETP focuses on GNI, but CEO Datuk Seri Idris Jala misdirected Malaysians by citing the stronger GDP numbers.[5]

GNI per capita increased 49 percent in 3 years.2010- RM8100

2011-RM9700

2012-RM9970

GNI in 1957 was merely USD257

Purchasing power parity is 2x of the Malaysian GNI.

4.

1 on October 25, 2010, PEMANDU said LFoundry Sdn Bhd, a subsidiary of German-based Landshut Silicon Foundry GmbH, would undertake a 200 mm water fab worth RM1.9 billion project. Yet nothing was mentioned in the "Achievements" section of the ETP Annual Report. Instead, a much smaller RM100 million equipment refurbishment and training centre project was highlighted.Lfoundry in Germany is declaring itself insolvent and going into bankruptcy proceedings.

-

5.

Damansara City 2 project by GuocoLand (Malaysia) Berhad was unveiled in the 3rd ETP Progress update on January 11, 2011. There was no status report, it was not even mentioned in the "Moving Forward" section. Instead three additional heritage routes and the upgrading of Masjid Jamek were highlighted instead. Marina Island Pangkor's International Resort & Entertainment Extension Project was showcased in the 4th ETP Progress Update on March 8, 2011. Strangely though, no progress update was given in the Annual Report on this huge project.[6]

-

6.

According to Asia-Pacific Sovereigns Andrew Colquhoun, ETP has failed to boost Malaysia's average income fast enough to avert a middle income trap.[7]

-

7.

According to Refsa, only 21% of income will eventually go to the workers as opposed to the current 28%. Only 21% of the income created by Pemandu's ETP will go to workers. Compare this to Singapore which allocates 40% and South Korea and the US which set aside 50%.[8]

-

8.

Karambunai project was initially announced in October 2010 during Datuk Seri Najib Razak's budget speech as a RM3 tourism project which more than tripled in value to RM9.6 billion when it was included in the fifth ETP update on April 19, 2011.[9]

Between in 2011 and 2012, Malaysia attracted 50 million visitors with RM100 billion GNI.

9.

Abdul Jalil Abdul Rasheed, who helps manage US$3 billion as CEO of Aberdeen Islamic Asset Management in Kuala Lumpur, is worried the lion's share of the billions in private investments needed for the ETP will come from government-linked companies who then raise funds by issuing bonds. These bonds then get government guarantees, making the government's debt position even more worrying should a default happen.[10]

Khazanah Nasional Bhd and Permodalan Nasional Bhd have identified a total of 10 companies to be divested to Bumiputera companies. Eight of these have officially been tendered for divestment.

10.

1Malaysia email or MyEmail project from last year that was taken by then public-listed Tricubes Bhd. It recently lost its listing status as it was not able to regularize its financials. RM5 million was invested but only 22,000 Malaysians registering for it. Lfoundry scrapped its operations in Kulim Hi-Tech Park.[11]

2012 Report state the failure of the Myemail is due to failed public relations with the public.

11.

According to Standard Chartered, a more focused approached than the ETP is needed to transform Malaysia. Instead of the ETP, Malaysia should emulate South Korea and Taiwan in reinventing its economy and moving up the value curve to high-quality products.[12]

Between 2011 and 2012, 1087 sundry shops were transformed under the TUKAR scheme with shops experiencing an increase of 30% of sales.

12.

The Equal Opportunities Commission (EOC), which was supposed to be part of the Economic Transformation Programme (ETP), has died a silent death due to pressure from certain NGOs.[13]

-

13.

RM594 billion of the incremental RM594 billion GNI that the ETP creates will go to corporate profits;Just RM166 billion will go to wages for employees; and

PEMANDU's target is to double nominal income per capita to RM48,000 by 2020. But using its forecasts for income and population growth, and inflation, the target should be RM54,145, not RM48,000.[15]

-

15.

MSC was renamed MSC Malaysia, the name of the lead agency changed from MDC to MDeC (while still remaining the Multimedia Development Corporation), MDeC is straitjacketed – it has been given the mandate to oversee and implement an initiative that promises to be as transformative as the other TPs were supposed to be, but without the teeth to do so.[16]

MdeC will focus on ongoing industry initiatives on two thrusts: Maintaining a competitive environment in Malaysia to attract foreign investment in outsourcing; and increasing the competitiveness of local companies by enhancing their scale, credibility and market reach.

16.

According to HwangDBS Vickers Research, GLC/Bumiputera developers tipped to benefit from government land redevelopment, owners of large land bank and investment assets in KL should also stand to benefit from ETP.[17]

Foreigners withdrew $42 million from Malaysian offshore equity funds in the last six months of 2012, while adding a net $129 million and $230 million to Philippine and Thai funds respectively.[18]

-

18.

Malaysian investment abroad of RM19.5 billion in the first half of this year surpassed the RM13.6 billion worth of investment that the country received.[19]

RM547 million worth of creative output and 157 hours of man hours was poured into the making of the Academy awarded of the movie Life of Pi.

19.

Cypark Resources Bhd has covered the 26ha former landfill in Nilai, Negeri Sembilan, with up to 32,000 solar panels, turning the area into what is said to be the largest solar photovoltaic (PV) farm in the country and South-East Asia.[20]

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2

In 2009, Najib dismantled a long-time restriction that benefited "sons of the soil." They can now own 100% stakes in businesses in 27 sub-sectors. Najib's 2012 budget extends that reform to 17 more sub-sectors such as medical and education services. But bigger reforms are absent from manufacturing and the labour market that suffers from entrenched affirmative-action policies.[21]

18 subsectors liberalised including quantity surveying that will be liberalised in 2013.Competition Act 2010 gazetted in 2012 and the first case is solved.

21.

Only 30% of Malaysians obtained higher education qualifications compared to Singapore's 46%, Thailand's 41% and South Korea's 89% in 2010. 80% of our workforce only receive secondary level education and only 25% of our workers are highly skilled compared to Singapore's 49%, Taiwan's 33% and South Korea's 35%.[22]

MSC Malaysia MyUniAlliance Programme is a new initiative by the MDeC with support from PEMANDU. The goal is to develop graduates who are industry-ready and employable.

22.

Najib says the GNI per capita rose 49% from US$6,670 in 2009 to US$9,970 in 2011. But World Bank note the figure was only 16.2%.[23]

GNI per capita increased 49 percent in 3 years.2010- RM8100

2011-RM9700

2012-RM9970

GNI in 1957 was merely USD257

23.

Foreign education institutions are struggling to launch in Educity. Of ten institusion approached to open campuses, only two institutions have officialy fully operated.

Globally recognised institutions including Newcastle University Medicine Malaysia (NUMed), Netherlands Maritime Instituteof Technology (NMIT), Raffles University Iskandar, University of Southampton Malaysia (USMC) and Reading University Iskandar have set up campuses.

24.

Recycled old projects such as the Tanjung Agas that was originally launched in 2009 with an investment shot of RM8 billion[24]that is relaunched under ETP as a transforming project.

-

25.

IHH Healthcare IPO falls flat, expects not dividends as it is no longer attractive to investors nor is it supportive of its rich valuation.[25]

-

26.

The renaming of the Kuala Lumpur International Financial District (KLIFD) or now known as Tun Razah Exchange (TRX) worth RM25.07 billion with the possibility of creating a propertyglut.[26]